Supreme Court Upholds RBI's Cut-Off Date for Pension Scheme in RBI v. M.T. Mani & Another.


23 May 2025 Civil Appeals >> Civil & Consumer Law   |   Unpaid salary/bonus/gratuity >> Workplace/ Professional Related  

The Supreme Court of India recently overturned a Kerala High Court decision, affirming the Reserve Bank of India's (RBI) right to set a cut-off date for pension scheme eligibility, particularly concerning the non-payment of arrears prior to that date. The ruling came in the case of The Reserve Bank of India v. M.T. Mani & Another, Civil Appeal No. 13962 of 2024, decided on May 23, 2025. The judgment was delivered by the Honourable Mr. Justice Abhay S. Oka and the Honourable Mr. Justice Augustine George Masih.

The case originated from a challenge by Respondent No. 1, M.T. Mani, to the RBI's Administration Circular No. 1 dated September 14, 2020, and subsequent detailed instructions of September 18, 2020. These circulars offered a "last option" for existing Contributory Provident Fund (CPF) optees and former employees who were in service on or after November 1, 1997, and had retired with CPF, to switch to the Pension Regulations. A key condition was that pension payments would commence from July 1, 2020, with no arrears for the period prior to this date.

 
 

M.T. Mani, who joined the RBI in 1981 and retired in 2014, had on four prior occasions (1990, 1992, 1995, and 2000) chosen to remain with the CPF scheme instead of switching to the pension scheme. Upon his retirement, he received his full CPF and gratuity dues. After the 2020 circular, he opted for the pension scheme and began receiving monthly pension benefits. However, he challenged the denial of pension arrears from his retirement date (November 30, 2014).

A Single Judge of the Kerala High Court initially dismissed Mani's writ petition, noting that he had accepted the terms of the 2020 scheme, including the non-grant of arrears and the effective date of pension from July 1, 2020. However, a Division Bench of the High Court allowed Mani's appeal on December 18, 2023, ruling that the denial of arrears was discriminatory, especially since earlier administrative circulars had granted arrears. The Division Bench reasoned that since Mani refunded the bank's CPF contribution with interest, he should be entitled to pension from his retirement date.

The Supreme Court, in its judgment, emphasized that each administrative circular issued by the RBI regarding the pension scheme options was independent and based on "well-informed, considered, and gauged decision[s] with regard to the applicability, liability and financial implications". The Court noted that the terms, including interest rates on refunds and eligibility criteria, varied with each circular.

A significant aspect of the Supreme Court's reasoning was the financial implications of granting retrospective pension benefits. The RBI had presented to the Government of India a proposal for the 2020 scheme that specifically excluded liability for pension arrears, a factor crucial to its approval. The Court highlighted that a retrospective financial burden of over ?900 crores would render the scheme unsustainable for the RBI.

Citing previous judgments, including Mohammad Ali Imam and Others Vs. State of Bihar and Others and State of Punjab and Others v. Amar Nath Goyal and Others, the Supreme Court reiterated that financial constraints, administrative exigencies, and economic conditions are valid considerations for fixing a cut-off date. The Court asserted that such policy decisions fall within the executive's domain and should not be interfered with by courts unless they are "blatantly capricious or outrageous".

The Supreme Court concluded that Mani, having voluntarily accepted the terms of the 2020 scheme, could not selectively challenge unfavorable conditions. The scheme was presented as a "package deal" or "conglomerate of various factors" where each component worked in tandem to make it viable. Allowing the respondent to pick and choose beneficial aspects while rejecting others would render the scheme unworkable.

Consequently, the Supreme Court set aside the Division Bench's judgment of the Kerala High Court and restored the Single Judge's order, thereby upholding the RBI's decision to deny pension arrears prior to July 1, 2020. This ruling reaffirms the principle of judicial restraint in matters of policy decisions, especially those with significant financial ramifications.


Payment of Gratuity Act, 1972